The trading week ended with the greenback under pressure despite Japanese stimulus moves and record unemployment in Eurozone member states. The release of weak economic data from the US showed that US economic growth had slowed to a yearly rate of 2.2% in the first quarter of 2012, down from the 3% rate recorded in the final quarter of 2011. The 2.2% was below analyst expectations of 2.5% and shows a quarter on quarter growth of 0.5%. Providing some comfort was the stronger demand from consumers and for motor vehicles. Consumer spending accounting for nearly 70% of the total US economy increased by 2.9% annually, the quickest rate of growth since the final quarter of last year. Motor vehicle sales increased by 2.1% in the final quarter of 2011, the quickest rate of growth in four years whilst home construction increased at its quickest rate of growth since Q2 of 2010. However, worrying markets and investors was the worse news that business spending fell for the first time since Q4of 2009 dropping by 2.1%, from of 5.2% in the fourth quarter of last year and Investment in equipment and software is increasing at its slowest rate since the end of the recession. The Federal Reserves stated this week that it was happy with its existing monetary policy, although there is growing speculation that the bank may embark upon on a 3rd round of quantitative easing, known as QE3.
In Europe, credit ratings agency Standard & Poor’s downgraded Spain for the second time this year after Spain’s unemployed rate reached 24.4%, an 18 year high. The number of jobless people hit 5,639,500 at the end of March with 365,900 people losing their jobs in Spain in the first three months of the year. Standard & Poor’s forecasts the Spanish economy will contract by 1.5% this year, having previously predicted 0.3% growth. Other figures published on Friday showed that Spanish retail sales fell 3.7% in March from the same time a year ago, making it the 21st consecutive month that sales have fallen.
Finally, in Japan, the BoJ announced they have expanded their plan for government bond purchases by 10 trillion Yen to stop the currency’s weakening trend.
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